The end for underperforming funds?

Polar Capital has closed two hedge funds and a long-only vehicle after a prolonged period of underperformance.

These are Polar’s Asia ex-Japan long-only portfolio and its Asian technology and absolute return hedge funds, the latter dubbed Lotus.

The latter fell from $86.7m in June 2007 to $56.8m in December and posted a total return of -12.18% for 2007.

Its Technology Absolute Return portfolio fell from $79.1m to $36.1m over the same period and lost 27.58%.

Polar Capital said the fall in total assets under management from $3.6bn to $3.2bn over the year reflects a loss of 11.1%.

It blamed the fund closures on poor performance as a result of challenging market conditions.

Mark Kary, Polar's chief executive, said: “We have continued to feel the impact of investors disenchantment with the Japanese equity market, which has lead to continuing redemptions in both our long-only and our underperforming Japanese hedge fund.

“On the hedge fund side, we have taken the opportunity to rationalise our range through the closure of the modest sized Asian technology and Asian absolute return funds both of which had delivered unsatisfactory returns.”

The firm was co-founded by Brian Ashford-Russell and Tim Woolley in 2001, as a technology specialist.

In this period of financial instability, will more hedge funds be forced to close too?